Factors Affecting Vehicle Sales, Insurance, Repairs by Patricia L. Harman, Property Casualty 360
Artificial intelligence, emerging technologies and changing consumer expectations are just some of the issues impacting auto sales, insurance and repairs, according to the 2018 Crash Course study from CCC Information Services, Inc. With 17.25 million vehicles sold in 2017, slightly down from 2016, the 2 percent increase in average vehicle prices to $36,113 meant it was still a strong year for manufacturers. Higher vehicle costs also mean increased insurance premiums, leading insureds to opt for higher deductibles should they be involved in an accident. According to the CCC report, 19 percent of all collision claims had a deductible of $500 or more, although the average repair generally costs significantly more than the deductible. Auto Technology Improves Manufacturers are working toward greater “vehicle connectivity, vehicle autonomy and vehicle electrification, powered by advancements in computer power, machine learning and artificial intelligence,” said Susanna Gotsch, Crash Course author and lead analyst for CCC. “Our industry has never moved faster or been so exciting. Advances in digitization, artificial intelligence, the internet of things, and sensor and camera technology are driving dramatic changes and improvements in automotive technology.” Connected vehicles are enabling vast amounts of information about a vehicle’s health, driving data (the vehicle and driver’s), performance, as well as vehicle-to-vehicle data to be collected by manufacturers, insurers and other parties. Some of the information can help insurers
with more accurate policy underwriting. SMA research anticipates that 70 percent of all auto insurers will be using telematics by 2020. The benefits include a shorter delay in filing the first notice of loss with an insurer, since crash data could conceivably be sent to the insurer, first responders (in the event of bodily injuries) and to the repairer. Technology usage in other areas has affected policyholders’ expectations for the insurance industry. Like online retailers who provide constant updates when packages have been dispatched, are en-route and will be delivered, insurers and repairers are expected to provide similar information to policyholders about their claims. Recognizing the importance regular communication has on customer satisfaction ratings, multiple insurers are utilizing programs to provide policyholders with regular updates on their claims status.
The Ups and Downs of Ride-Sharing As the use of ride-sharing increases, so does the number of vehicles on the road and miles driven. The Institute of Transportation Studies at UC Davis studied ride-hailing in seven U.S. cities and found a 6 percent drop in the use of public bus transportation and a 3 percent drop in light rail use. In New York City, increased ride-sharing usage accounted for declines in the use of taxi and private car services. For business travelers, ride-sharing now accounts for 65 percent of the ground transportation costs, according to the Center for Automotive Research, while taxis only account for 7 percent and car rentals for 28 percent. Even airports are reporting a major drop in fees
from parking, car rental companies and taxis. Auto Repair Costs Climb While Collision Severity Drops The increased use of advanced driver assistance systems (ADAS) such as front crash prevention, blind spot detection, lane departure warnings, park assist, obstacle detection and back-over prevention is having a positive impact. While these technologies are not mandated by the National Highway Traffic Safety Administration (NHTSA), the Insurance Institute for Highway Safety (IIHS) and NHTSA announced in 2016 that 20 major auto manufacturers had voluntarily committed to making front crash prevention systems standard on most models (approximately 99 percent) by 2020. Studies by the Highway Loss Data Institute (HLDI) and IIHS have found that vehicles equipped with forward collision warning systems have reduced rear-end collisions by 23 percent, and accidents involving vehicles with automatic emergency braking dropped by 40 percent. The CCC report finds that in addition to fewer accidents, these systems may also help reduce the number of incidents involving cyclists and pedestrians. While these technologies have shown promise in reducing the number and severity of accidents, the cost to repair vehicles continues to rise. CCC said the average cost for a repair increased by 2 percent in 2017, to $2,927. Repair costs for non-comprehensive losses ran 2.3 percent higher in 2017 than the previous year, with costs for current model vehicles running slightly higher at 3.7 percent. Costs to repair vehicles that were 1 to 3 years old increased by 3%. However, there is a significant
AMi Hires Michael Cassata as Director of Collision Industry Outreach
The Automotive Management Institute (AMi) recently announced that Michael Cassata has joined the organization in the newly created role of Director of Collision Industry Outreach. Cassata recently retired from Amica Insurance, where he held positions as National Repair Assistance Program Manager (DRP), National CAT Manager and Salvage/Recovery 60
Manager. Since his retirement, Mike has offered consulting services through his company, Hammer Insights. He was the founding member of the ICAR Rochester Committee and continues to serve on numerous industry advisory committees. “I have been supportive of AMi's new, relevant programs and now look forward to playing a role in the orga-
APRIL 2018 AUTOBODY NEWS / autobodynews.com
nization's future growth and service to the industry. I believe we must continue to grow, evolve and learn in every aspect of our lives. This is a perfect fit for the AMi message, and I am so happy to be working with Jeff and his staff to promote this to our industry,” Cassata said. Cassata may be contacted at mcassata@amionline.org.
difference in repair costs depending on the age of a vehicle. Average repair costs for new vehicles compared to older ones increased from 47 percent to 69 percent over the last five years. “Dollars for replaced parts as a share of total repair costs and the average number of replaced parts per claim have increased—particularly for newer vehicles,” said Gotsch in her report. The increased use of driver assistance technologies can help mitigate or even prevent accidents, but like cell phones and other technology, they will also change driver behaviors. For insurers, this could also mean changes in liability and the types of insurance coverage required for a vehicle. The actual repair costs, while higher, could be offset by fewer overall accidents, which would have a long-term impact on parts suppliers and repair shops as well. The changes for all are probably coming more quickly than anyone expects. We thank Property Casualty 360 for reprint permission.
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